Tisco steels $1bn plan for Ukraine buy

Suman Das Sarma, TNNFeb 17, 2004, 01.05am IST

KOLKATA: Tata Iron and Steel (Tisco) is looking at privatisation of state-owned Kryvorozhstal Kryvy Rih in Ukraine, which has the world's largest deposit of iron ore reserves, along with integrated ore processing and steel making facility.

Kryvy Rih region, one of the four iron ore deposit belts in Ukraine, is estimated to hold about 90% of the country's 27bn tonnes of high grade ore. For this acquisition, Tisco is said to be ready with a warchest of about $1bn of investible fund.

According to top sources, after some initial study, Tisco has approached the Ukrainian government showing interest in participating in the privatisation process of Kryvorozhstal. The state-owned ferrous company also has a steel making capacity of about 5m tonne per annum.

Tisco managing director B Muthuraman recently said the company was looking at various acquisition opportunities in countries like Ukraine, China, Thailand, Singapore, Malaysia and Vietnam.

Tisco officials, however, refused to comment on specifics when asked about Tisco's interest in privatisation of Kryvorozhstal. "Ukraine is one country among various options we are looking at. We are not close to finalising any particular acquisition at the moment," the company's spokesperson said.

On asked about the size of investment Tisco is looking at for the Ukrainian acquisition, officials did not spell out any figure but added that Tisco has an investible cash of about $1bn for acquisitions. Investment for any acquisition, as and when it materialises, will depend on the quality of particular assets, he added.

Besides Kryvorozhstal, other big steel capacities which the Ukrainian government is planning to privatise include Azovstal and Zaporiszhstal. Ukraine's marginal iron ore belt includes regions like Kremenchuk, Bilozerske and Kerch. In fact, Tisco's hunt for more iron ore reserves has been clear as Mr Muthuraman believes that the company's existing deposits at Noamundi and Joda in Jharkhand are not sufficient enough to support the company long term plans for expansion to 15m tonne by end of this decade. Tisco is already in talks with Jharkhand Mineral Development Corporation to work on large scale mining on new ore deposits. Tisco is also taking a re-look at Orissa after its iron ore lease got cancelled recently.

Tisco, a 4.5m tonne company, has also been in talks with China's 19m tonne Baosteel for alliances. Top sources said the alliance could be strategic in nature in which Tisco may swap some of its existing surplus iron ore for supply of machinery or may even pick up strategic minority interest.

Tata group chairman Ratan Tata visited Beijing last week looking at investment opportunities in China including that in steel business.

In Thailand, Tisco was once in talks with state-owned steel firm, Thai Union Steel (Tusco) for a take-over.